Harvard Business Review

JUNE 22, 2015

Marketers often have to make the call on whether a certain marketing investment is worth the cost. Can you justify the price tag of the ad you want to buy or the marketing campaign you’re hoping to launch next quarter? Revenue is the unit quantity sold multiplied by the selling price per unit. How do you calculate it?

Payback Period 8

Payback Period Fixed Costs Analysis Price 8

Harvard Business Review

NOVEMBER 4, 2014

The key argument for fossil fuel divestment is that the cost of carbon dioxide emissions and other pollutants are not being accurately priced by the market. This could limit everyone’s ability to engage the management of these companies in a discussion around climate change. In this case, divestment would clearly backfire.

Finance 8

Finance Cost of Capital Constraint Price 8

Harvard Business Review

NOVEMBER 4, 2014

The key argument for fossil fuel divestment is that the cost of carbon dioxide emissions and other pollutants are not being accurately priced by the market. This could limit everyone’s ability to engage the management of these companies in a discussion around climate change. In this case, divestment would clearly backfire.

Finance 8

Finance Cost of Capital Constraint Price 8

Harvard Business Review

FEBRUARY 1, 2018

One option, of course, is to drive up the stock price by buying back shares, and some CEOs may choose that course. The cost of capital is at historic lows, averaging below 6% for most large U.S. Indeed, for most companies, the value of accelerating growth greatly exceeds the value of returning capital to shareholders.

Supply Chain 8

Supply Chain CEO Discount Retail 8

Harvard Business Review

APRIL 5, 2017

However, firms can efficiently increase margin growth without much revenue growth by managing to squeeze out their fixed costs to service the same level of output. Many compensation plans reward managers for higher earnings and higher stock prices, as opposed to rewarding them for adding long-term value to the firm.

EPS 8

EPS Metrics Depreciation Short-term 8

Harvard Business Review

MAY 4, 2012

The arguments center on the value of establishing increased transparency with investors, and include: Higher Stock Price: The advocates for guidance argue that it can result in a higher stock price. Otherwise, they may be shackled by Fair Disclosure (Reg. FD) constraints.

CFO 11

CFO Metrics Price Depreciation 11

Harvard Business Review

APRIL 16, 2012

Strategic cash provides more flexibility concerning the timing and pricing of potential acquisitions; having cash on hand is the best insurance that CFOs will be able to respond with alacrity to opportunities and not be subject to the vagaries of the financial markets. Barring a tax holiday, this cash is effectively "trapped" offshore.

Company 13

Company Cost of Capital Finance Long-term 13

Harvard Business Review

OCTOBER 21, 2016

These require sophisticated, sustainability-based management. Yet executives are often reluctant to place sustainability core to their company’s business strategy in the mistaken belief that the costs outweigh the benefits. ” Improving risk management. billion in mining projects since 2010. Fostering innovation.

Supply Chain 8

Supply Chain Price Loyalty Efficiency 8

Harvard Business Review

MARCH 10, 2011

Many are deeply uncertain about which initiatives they should fund — and one root of this indecision is a general lack of confidence in the cost of capital projections they are using to make the call. We find that 55 percent of respondents are convinced their cost of capital estimates are off by more than 50 basis points.

Cost of Capital 12

Cost of Capital CAPM Cost Discounted Cash Flow 12

Harvard Business Review

JUNE 18, 2015

What have been less explored are the specific actions taken by private equity (PE) fund managers. In a survey of 79 PE firms managing more than $750 billion in capital, we provide granular information on PE managers’ practices and how firms’ strategies relate to the characteristics of their founders.

CAPM 8

CAPM Discounted Cash Flow Company Rate of Return 8

Harvard Business Review

FEBRUARY 7, 2011

Take, for instance, a group of companies that currently have high returns on invested capital (ROIC). If you follow that group over time, you would see their ROICs revert back toward the cost of capital. Consider the 1990s, when stock prices soared to lofty levels.

Skills 15

Skills ROIC Sports Cost of Capital 15

Harvard Business Review

OCTOBER 11, 2013

When the well-known hedge fund manager and short-seller Jeremiah Hughes first put Terranola in the spotlight, issuing ominous warnings about unsold products, a looming patent expiration, and flawed growth projections, the considered judgment of the executive team was to do nothing. “I Doom and Gloom. As CFO, A.J. The discussion was heated.

Case Study 8

Case Study CFO Hedge PR 8

Harvard Business Review

MAY 24, 2017

Today’s executives spend a lot of time managing the balance sheet, despite the fact that it doesn’t represent their company’s scarcest resource. Financial capital is relatively abundant and cheap. According to Bain’s Macro Trends Group, the global supply of capital stands at nearly 10 times global GDP.

Human Capital 15

Human Capital Management Company ROCE 15

Harvard Business Review

FEBRUARY 7, 2017

Companies deliver superior results when executives manage for long-term value creation and resist pressure from analysts and investors to focus excessively on meeting Wall Street’s quarterly earnings expectations. In this case its capital charge is $800 times 8%, or $64. This has long seemed intuitively true to us.

Long-term 8

Long-term EPS Short-term Management 8

Harvard Business Review

NOVEMBER 7, 2012

There is a fascinating relationship between executives and the stock prices of the companies they manage. On the other hand, they frequently find their stock price inscrutable. The vast majority of executives think that their price is too low, but few can articulate an analytical case that backs that intuition.

Price 8

Price Analysis Cost of Capital Disruptive Innovation 8

Harvard Business Review

SEPTEMBER 8, 2014

The goal of strategy is profitable growth, meaning economic value above the firm’s cost of capital. Hence, the customer-selection criteria of sales managers, and call patterns of sales reps, directly impact the first value-creation lever: which projects the firm invests in. But consider the basics.

Debt to Equity Ratio 9

Debt to Equity Ratio Cost of Capital Strategy Incentives 9

Harvard Business Review

APRIL 2, 2014

The prizes were awarded “for their empirical analysis of asset prices,” but what the three had been doing looked from the outside less like a common endeavor than a not-all-that-coherent argument. So I wanted to see if Campbell could make sense of the prizes and the current state of academic knowledge about asset prices.

CAPM 8

CAPM Discount Price Finance 8

Strategy Driven

SEPTEMBER 9, 2011

The logic of NPV is to project cash flows into the future and then discount those flows back into today’s dollars at a given cost of capital. Yet for the small handful of companies that have managed to drive growth consistently – even through tough times – the payoff is great. How do they do it?

Innovation 50

Innovation NPV Business Model Constraint 50